By Robin Sidel And Chelsey Dulaney
Payment-card network MasterCard Inc. on Wednesday reported
second-quarter earnings that were close to flat from year-earlier
levels, with revenue growth that was slightly weaker than
expected.
The Purchase, N.Y.-based company said it is continuing to feel
pressure from a strong U.S. dollar, particularly when compared with
the euro and the Brazilian real. The company also said that revenue
growth is being dampened by incentives paid to clients, as well as
the continuing shift of J.P. Morgan Chase & Co.'s credit-card
portfolio to Visa Inc.
Despite those issues, "our business continues to perform well,
with good volume and good transaction growth," said Chief Executive
Officer Ajay Banga in a conference call with analysts. Shares of
MasterCard rose 78 cents, or 0.8%, in afternoon trading on the New
York Stock Exchange.
For the period ended June 30, the company posted earnings of
$921 million, or 81 cents a share, compared with $931 million, or
80 cents a share, in the same period a year ago. The results
included a $44 million after-tax charge related to a U.K. merchant
litigation settlement.
Excluding that charge, per-share earnings were 85 cents.
Revenue edged up 1% to $2.39 billion, or 7% excluding currency
impacts.
Analysts had projected 85 cents a share in profit and $2.41
billion in revenue, according to Thomson Reuters.
Mr. Banga said that the company is seeing improved economic
conditions in the U.S. and Europe, but U.S. consumers still aren't
spending their savings from lower gas prices. That has been a
recurring issue for the card industry in the past several months as
consumers stash those savings in bank accounts or use them to repay
debt.
The chief executive also said that it is too early to assess the
impact from a recent court decision that is forcing American
Express Co. to start allowing merchants to steer customers to other
card brands. AmEx is expected to soon start informing millions of
merchants about the details of the change.
Operating expenses rose 15% in the quarter to $1.14 billion amid
acquisition costs and higher data processing, advertising and
marketing expenses.
Like rival Visa, MasterCard processes electronic payments on its
network, but doesn't collect interest or set interest rates.
In the latest quarter, purchase volume grew 12%, on a
constant-currency basis, to $841 billion. Processed transactions
rose 13% to 12 billion, while cross-border volumes grew 17%.
Gross dollar volume rose 13%, in terms of local currency, to
$1.1 trillion.
Last week, Visa said profit jumped 25% in its latest quarter,
fueled by double-digit growth in payment volume despite a similar
rise in operating expenses.
Write to Robin Sidel at robin.sidel@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com